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Sat, Dec 10, 2005 - Page 12 News List

Intel losing market share to rival AMD, forecast indicates

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Intel Corp's sales forecast disappointed investors and signaled the world's biggest chipmaker may be losing market share to Advanced Micro Devices Inc (AMD).

Revenue will rise to between US$10.4 billion and US$10.6 billion this quarter, compared with an Oct. 18 forecast of as much as US$10.8 billion, Santa Clara, California-based Intel said on Thursday.

Chief financial officer Andy Bryant said the companies are engaged in "hand-to-hand combat" and AMD will take market share.

The comments signal that AMD, which has lagged behind Intel with no more than 16 percent share in the past three years, is finding success with its newest chips, Opteron and Turion. The gains forced Intel to cut prices, weighing on sales, and to speed up the introduction of new products for servers, which run Web sites and corporate networks. Intel also failed to keep up with demand, Bryant said.

"Suddenly AMD is getting more competitive," said Krishna Shankar, an analyst at JMP Securities in San Francisco.

Sanford C. Bernstein & Co's Adam Parker, the top-ranked chip analyst by Institutional Investor, had expected Intel to post sales of at least US$10.6 billion.

AMD, the No. 2 maker of computer processors, said last month shipments will grow 20 percent next year, beating a 10 percent gain by the market. Phil Hughes, a spokesman for Sunnyvale, California-based AMD declined to comment.

Chief executive Hector Ruiz said last month he expects AMD's market share to rise to about 20 percent next year from 12.7 percent in the third quarter, citing figures from Mercury Research.

The company won orders from server makers including Palo Alto, California-based Hewlett-Packard Co and Armonk, New York-based International Business Machines Corp with chips that offered new features ahead of Intel.

Intel's market dominance isn't likely to be worn away any time soon and any gains by AMD may be temporary. Intel said on Dec. 1 it will spend US$3.5 billion on a single plant in Israel and is working on new chips for release next year that will compete with AMD. Intel's ability to ramp up production may help it retain its lead.

"Frankly, AMD does not have the capacity, or the global presence, to seriously hurt Intel," Shankar said.

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